’We Don’t Even Do Takeout’: Why, Then, Is This Restaurant on Seamless?

January 29, 2020 Admin 0 Comments

How did delivery apps mix up a Michelin-starred restaurant with a delivery-only ghost kitchen?

Chef Pim Techamuanvivit was managing the floor at her Michelin-starred San Francisco Thai restaurant Kin Khao last Saturday night when she answered a strange phone call from a customer asking about the status of his online delivery order. Just one problem: “We don’t do any delivery,” says Techamuanvivit. “We don’t even do take out.”

But this customer was adamant. He’d placed an order through Seamless from a business under Kin Khao’s name and address, as an email receipt showed. Techamuanvivit Googled her restaurant and saw it was true: Without her knowledge or consent, Kin Khao was listed on Seamless, as well as Grubhub, which owns Seamless, and its competitor Doordash. An “order delivery” button even appeared on the restaurant’s real Yelp page, linking to Grubhub.

As a series of public complaints and lawsuits in recent months has shown, that practice isn’t entirely new: Several delivery services, including Postmates, Seamless, Grubhub, and Doordash, offer food from restaurants without their explicit permission. The delivery apps pull up restaurant menus listed online, from which customers make their selections, and couriers working for the apps place orders on their behalf. The process essentially inserts third-party apps as middlemen into a service many restaurants say they want control over, or wish to opt out of entirely.

This, however, was different. The Kin Khao showing up on all the delivery apps wasn’t Techamuanvivit’s Kin Khao at all. “I looked at the menu, and my [restaurant] name, and the address, and thought, what the hell is this?,” she says. Instead of Kin Khao’s popular dishes, like mushroom hor mok terrine with crispy rice cakes, this menu showed dishes like pad thai, fried noodles, and Vietnamese pho. The customer, who had recently enjoyed dinner at Kin Khao’s sister restaurant Nari, told Eater he specifically checked for Kin Khao on Seamless and found the listing. It seemed too good to be true, he admits now: For one thing, the prices were pretty low, and he didn’t think that Kin Khao did dishes like fried noodles, but he shrugged off those concerns. Shortly after placing his order, he got a text from Seamless reporting it had been “delayed.” Eventually, he called the restaurant directly. “We were both really confused,” says Techamuanvivit.

To learn more about her restaurant doppelgänger, Techamuanvivit tried to order from it via Grubhub, Seamless, and Doordash. Food never came: The orders would be delayed, then cancelled and refunded.

According to Doordash, a “clerical error” in its system confused the Michelin-starred Kin Khao with a new “virtual restaurant” called Happy Khao Thai, which is not yet serving food and was listed prematurely. Grubhub, which owns Seamless, says it made the same mistake as Doordash. “We referenced the incorrect menu for this restaurant,” a spokesperson says. Grubhub, Seamless, and Doordash have all since removed Kin Khao from their platforms, and Yelp has deleted Kin Khao’s “delivery” button from its listing.

The confusion with Kin Khao was unintentional, says a spokesperson for Happy Khao Thai’s parent company. But that its menu could be linked to a totally unaffiliated restaurant with Michelin caché demonstrates the way Happy Khao Thai and virtual-only businesses like it can only further muddy the already-murky waters of online delivery.

Techamuanvivit is still suspicious, angry, and considering a lawsuit. “Conveniently, they added the Thai restaurant with a Michelin star for the last five years,” she says. Delivery apps, she observes, stand to benefit from listing high-profile restaurants like Kin Khao without their permission, and they even stand to profit from the confusion. The more options on their platforms — virtual or real, permission given or withheld — the better.

But for Techamuanvivit, the confusion can only hurt her business. “They’re impersonating me, defrauding me, defrauding my guests, and their customers,” she says. “They can’t think that they can get away with this.”

So-called third-party delivery companies like Grubhub and UberEats have done a lot to confuse and irritate restaurants while promising to help them reach more customers. For years, Postmates and Doordash couriers in particular have ordered and picked up food on behalf of online customers without getting restaurants’ permission. The practice often rankles restaurants: They can’t control the amount of delivery they want to do, their dishes might not be designed for long travel and high-volume, and third-party menus are often out of date or otherwise inaccurate.

Recently, in a move to compete with the Postmates and Doordash model, Grubhub and Seamless adopted a similar policy, adding “non-partnered” restaurants to their platform. Starting a few months ago in some cities like San Francisco, Grubhub added restaurants without their permission based on local demand — i.e. searches — for them. If Grubhub can demonstrate public interest in getting delivery from a particular restaurant, the plan goes, maybe restaurants will actually partner up. Kin Khao was one of these restaurants, Grubhub confirms.

“You can’t keep them out,” says Adam Mesnick, the owner of San Francisco sandwich shop Deli Board, which hasn’t signed a contract to do third-party delivery. But this weekend, about 15 Grubhub couriers came to Deli Board seeking to fill orders placed online, some for menu items that were out of date and no longer offered. “It’s their job to pick up food, and they’re just kind of confused,” says Mesnick. Grubhub says it works “to provide accurate menus and hours for these restaurants on our marketplace based on available information online.”

“It’s indicative of a broken system,” says Mesnick. Deli Board has since been removed at Mesnick’s request. “There was no contact, there was no outreach,” he says. “I didn’t have any software or knowledge of it.”

According to its annual report, Chicago-based Grubhub, which is publicly traded, made $1 billion in revenue on $5 billion in orders in 2018. But the entire food delivery market is more competitive and precarious than ever. By last November, Grubhub’s market share had declined to 30 percent from more than 50 percent two years prior, according to data from a credit card measurement company. Doordash, which is still private and backed by venture capital, took the lead in the market with 37 percent market share. These days, Grubhub is reportedly considering a possible sale or acquisition.

This current competitive climate might partly account for Grubhub’s new tactics. In a previous statement to Eater, a Grubhub spokesperson said the company has been adding non-partnered restaurants “so we will not be at a restaurant disadvantage compared to any other food delivery platform.”

“The non-partnered model is no doubt a bad experience for diners, drivers and restaurants,” the spokesperson admitted. “But our peers have shown growth — although not profits — using the tactic, and we believe there is a benefit to having a larger restaurant network: from finding new diners and not giving diners any reason to go elsewhere.”

According to a report by the Counter, Grubhub has registered more than 23,000 web domains for real restaurants, creating “shadow pages” that often compete with restaurants’ real websites. If its shadow pages show up higher on Google search results than a restaurant’s own site — or are added by Google’s listings themselves — it’s an advantage for Grubhub, since the delivery service charges higher fees to restaurants when it can claim it helped customers discover them. Grubhub argues that its contract with restaurants includes a provision reserving the right to purchase domain names to set up “microsites” on their behalf.

In a similar maneuver, Grubhub also sets up new phone numbers for restaurants with whom they have contracts, displaying those numbers instead of the restaurant’s direct lines on their websites and apps. Grubhub then forwards those calls to restaurants and charges fees for calls that lead to orders. Some restaurants, like Tiffin Indian Cuisine in Philadelphia, claim that Grubhub charges fees for every phone call, many of which don’t result in orders, or are just calls to check in on existing orders. Tiffin’s owner filed a class-action lawsuit in in Philadelphia federal court seeking $5 million in damages; Grubhub disputes the restaurant’s claims.

After she learned about the fake Kin Khao listing, Techamuanvivit tweeted about it, encouraging other restaurateurs to search for their own unwelcome delivery pages. Business owners across the country chimed in with similar, if not quite so egregious, experiences. Some, like Carrie Blease, co-owner of Michelin-starred San Francisco restaurant Lord Stanely, found delivery listings for their no-takeout restaurants, too, uncovering more gaps in the system.

“It’s an old menu, but it’s our menu. It’s our food,” says Blease, who located Lord Stanley on Grubhub and Seamless late Saturday night. “[Grububhub] gave me the option to pre-order something for the next day,” she says. According to a confirmation email, Blease ordered the onion petals with sherry vinegar — a popular dish at Lord Stanley — for $5, with a $5.99 delivery fee, a $5.49 service fee, a $2.00 small order fee, $1.58 in tax, and a $3.61 tip, for a total of $23.67.

“Your delivery order from Lord Stanley is being prepared,” the email said. “Your food should arrive between 11:15 a.m. and 11:25 a.m.”

On Sunday, Blease wondered what might arrive; nothing did. Lord Stanley, she says, never received the order from Grubhub. Eventually, Blease texted Grubhub support, who apologized. Lord Stanley, they told her, was actually closed on Sundays. She could try again when the restaurant reopened on Tuesday, they said, and her $23.67 would be refunded. In fact, Lord Stanley is open daily. Old hours listed online could be the source of confusion.

Blease is baffled. “I don’t know what the scheme is,” she says.

There might not be one. But when Grubhub and others hastily develop an online presence for restaurants without their knowledge or buy-in, they appear to open the door to confusion, and, intentionally or not, mistaken identity.

The company that runs Happy Khao Thai — the restaurant that Doordash and Grubhub confused with Kin Khao — insists that the error was with Doordash and Grubhub. “We are working with the delivery apps to investigate how this error occurred and to prevent any future incidents moving forward,” a spokesperson says. Happy Khao Thai, she says, isn’t trying to pass itself off as anything it’s not.

But Happy Khao Thai, as part of the “ghost kitchen” movement, poses what some real restaurants view as a potential threat. Ghost kitchens, also called virtual restaurants and cloud kitchens, are concepts created specifically to serve the rise of delivery apps. They’ve gained traction in cities like San Francisco and New York, fueled by investment from tech companies like ex Uber-CEO Travis Kalanick’s Cloud Kitchens, which has $700 million in funding. The kitchen that runs Happy Khao Thai is operated by a startup called Reef Technologies, a parking lot company turned virtual restaurant business. According to a Nation’s Restaurant News article, Miami-based Reef operates 5,000 parking facilities, and is now backed by major investment from Softbank. Reef calls its garage kitchens “vessels,” boasting that each can play the part of five different delivery-only restaurants. Happy Khao Thai’s San Francisco location, for instance, is a mobile commercial kitchen that also prepares wings and mozzarella sticks under the name Wings & Things.

Many small restaurant owners see ghost kitchens as frightening. They can potentially compete with brick-and-mortar businesses at lower costs and could snap up business from existing restaurants with similar offerings. Following concerns voiced by some NYC restaurateurs, New York’s City Council plans to hold a hearing on the proliferation of ghost kitchens next month.

There are lots of reasons for restaurants not to do delivery. Services charge increasingly high fees of restaurants, and demand higher volume that can strain their kitchens. Techamuanvivit doesn’t object to the practice itself. It’s just not right for Kin Khao.

“I don’t have anything against delivery, I order delivery sometimes myself,” she says. “Some restaurants make a choice to do delivery, they think they can do it in a way that’s acceptable to them, and if they make money from it, I’m not making a judgment against that.”

Several years ago, Kin Khao even briefly tried delivery through the service Caviar, which is now owned by Doordash. “Every time we have a to-go order, the line has to pause, and someone has to grab all the boxes. And the way I want to present my food — if you order, say, a khao soi — I‘m not going to put it all in one container, because it’s not going to get to you the way I want you to eat it. So we have the noodles in one box, curry broth in another, all the sauces, soft garnish in one, crispy garnish in another, and by the time it’s done, it’s five containers.”

Techamuanvivit’s recent experience, though, has caused her to look at delivery differently, and she implores customers to think critically. “If you’re trying to order something from Doordash, you should ask yourself, where are they picking up your food? Where is it actually from?”

Mesnick, Deli Board’s owner, agrees. “What [online ordering] is supposed to create is simplicity.... But now people need to call and check and see if [the business] actually accepts the delivery from Seamless — which kind of defeats the whole purpose.”

With two major SF restaurants, an executive chef job at Bangkok’s Michelin-starred Nahm, and a large following on Twitter, Techamuanvivit has a platform in her industry. But she’s worried about smaller, less well-known restaurants getting caught up in the system, too. “It’s terrible. [If] I’m a small restaurant and I’m in a little town, I’m just gonna be crying at home in the corner of a room, and there’s nothing I can do to get off of these sites.”

That’s why she’s speaking out, she says, and why she’s intent on legal action. “I have a voice and I’m not afraid to raise it.”